W. C. English, Inc. v. Rummel, Klepper & Kahl, LLP

• Decision Date: 14 August 2019
• Docket Number: No. 18-1529,18-1529
• Citation: 934 F.3d 398
• Parties: W. C. ENGLISH, INC., Plaintiff - Appellant, v. RUMMEL, KLEPPER & KAHL, LLP; CDM Smith, Inc., Defendants - Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

934 F.3d 398

W. C. ENGLISH, INC., Plaintiff - Appellant,

v.RUMMEL, KLEPPER & KAHL, LLP; CDM Smith, Inc., Defendants - Appellees.

No. 18-1529

United States Court of Appeals, Fourth Circuit.

Argued: May 8, 2019

Decided: August 14, 2019

ARGUED: Dustin M. Paul, VANDEVENTER BLACK, LLP, Norfolk, Virginia, for Appellant. Jason N. Smith, SEYFARTH SHAW, LLP, Washington, D.C., for Appellee CDM Smith, Inc. William D. Bayliss, WILLIAMS MULLEN, Richmond, Virginia, for Appellee Rummel, Klepper & Kahl. ON BRIEF: James R. Harvey, III, Norfolk, Virginia, Andrew P. Selman, VANDEVENTER BLACK, LLP, Richmond, Virginia, for Appellant. Anthony J. LaPlaca, SEYFARTH SHAW, LLP, Washington, D.C., for Appellee CDM Smith, Inc. Brendan D. O’Toole, Joseph R. Pope, WILLIAMS MULLEN, Richmond, Virginia, for Appellee Rummel, Klepper & Kahl.

Before NIEMEYER and HARRIS, Circuit Judges, and Ellen L. HOLLANDER, United States District Judge for the District of Maryland, sitting by designation.

Vacated and remanded by published opinion. Judge Niemeyer wrote the opinion, in which Judge Harris and Judge Hollander joined.

NIEMEYER, Circuit Judge:

The Virginia Department of Transportation awarded W.C. English, Inc., the contract to construct a bridge over Interstate 81 near Lexington, Virginia. English in turn retained Rummel, Klepper & Kahl, LLP ("RK&K") to provide "quality assurance" services and CDM Smith, Inc., to provide "quality control" services.

During the construction of the bridge, after much of the bridge’s concrete deck had been poured, it was discovered that there was an incorrect depth of concrete over the deck’s rebars, which resulted from the rebars’ improper placement. Because the deficiency affected the structural capacity of the deck, the Virginia Department of Transportation required English to tear down the bridge and rebuild it. English did so at a cost of over $3.1 million.

English then commenced this diversity action against RK&K and CDM Smith for breach of contract and indemnification. The district court granted summary judgment to RK&K and CDM Smith with a 29-page opinion, which construed contractual provisions and determined some of the facts relating to the conduct of the parties during construction. In doing so, the court construed ambiguous contractual language and resolved factual disputes, which, we conclude, violated the established principles of summary judgment. Accordingly, we vacate the district court’s judgment and remand for further proceedings.

I

The contract between the Virginia Department of Transportation ("VDOT") and English for construction of the bridge over Interstate 81 required an 8.5-inch concrete deck reinforced by two separate mats of crisscrossed rebars placed so as to end up with a 1.5-inch concrete cover underneath the mats and a 2.75-inch concrete cover over the top of the mats. To achieve the specified cover dimensions, the mats had to be 2.5 inches apart. English concluded that 2.5-inch spacers, known as "chairs" or "slab runners," needed to be installed between the mats to maintain the 2.5-inch space required between them.

During the course of construction, however, a decision was made by certain English and RK&K personnel to insert 1.75-inch slab runners between the reinforcement mats, which resulted in an incorrect concrete cover and thus the bridge’s failure to satisfy VDOT’s specifications. Instead of having a 2.75-inch cover, as specified, the cover as constructed was 3.75 inches and more. After VDOT conducted an analysis of the performance of the deck as constructed, it concluded that it could not satisfy the structural capacity required and demanded that English tear down and rebuild the bridge. English did so at a cost of over $3.1 million.

English commenced this action against RK&K and CDM Smith, asserting claims for breach of contract and indemnification arising from the construction deficiency and seeking as damages the cost of reconstructing the bridge. It alleged that RK&K failed to provide "quality assurance" ("QA") services as required by its subcontract and that CDM Smith failed to provide "quality control" ("QC") services as required by its subcontract. The QA and QC functions, while related, were distinct, as provided in VDOT’s project requirements:

Quality Assurance — A process performed independently of the construction contractor ... for the purpose of determining the conformance of the work by examining the QC data and/or providing objective evidence (independent sampling and testing), to verify the contractor’s quality control sampling and testing. The contractor will (organizationally through services independent of production forces) provide the QA inspection normally provided by VDOT ....

Quality Control — Quality control functions performed by the Design-Builder. The quality control function (QC) is to assess and adjust design, production and construction processes so as to control the level of quality being produced in the Project. The purpose of QC is to measure those quality characteristics and to inspect those activities that affect the production at a time when corrective action can be taken to substantially decrease the likelihood that appreciable non-conforming material will be incorporated in the Project.

In their subcontracts with English, RK&K as the QA provider and CDM Smith as the QC provider agreed to follow the "Construction Quality Assurance Plan" and the "Construction Quality Control Plan," both of which were part of the broader "Quality Assurance/Quality Control Plan" for the project.

In particular, the Quality Assurance Plan outlined "three classifications of noncompliant work" and described the responsive procedures for each:

Level 1 (QC) — Deficient work identified and corrected same day — An example would be reinforcing steel being tied for a bridge footing that does not have the proper cover. The QC inspector points it out to the foreman who corrects it immediately. This issue is noted in the diary by the QC inspector. The QC inspector notes what they found and what the contractor did to correct the issue. The issue is closed.

Level 2 (QA and QC) — Deficient work identified and corrected at a later date — These are items that a QC inspector identifies in the field, notifies the foreman, the foreman agrees to fix the item, and the QC inspector notes in their diary what the issue is, the corrective action agreed to and the date it will be completed. The diary is then turned into the QA Office Engineer who transfers the issue to the project Issue Log so it can be tracked to ensure it is fixed. The Issue Log is reviewed by the QA and QC team on a weekly basis to ensure all items are corrected. The QA and QC team performs reinspection of the item prior to removing it [from] the Issue Log. The Issue Log will be turned in weekly to VDOT as well. All issues must be corrected prior to the Design-builder receiving 100% payment for that item.

Level 3 (VDOT, QA and QC) — Deficient work identified and corrected at a later date where a witness or hold point (i.e. VDOT’s approval) is required — This is an issue that results [in] a Non-conformance Report (NCR) where the infraction is of a serious nature and requires input from the upper level management from the Design-build team, such as the Design Manager, to resolve it. If a corrective action must take place in the field due to the NCR, a witness or hold point will be initiated to ensure VDOT has the opportunity to review the design-builders performance of the corrective action. When the nonconformance work has been re-inspected by the QC and QA team (and VDOT if required by resolution of the NCR) and the results are satisfactory [an] NCR notice of correction will be issued. All NCR resolutions require VDOT’s concurrence. In addition, all NCR’s must be corrected prior to the Design-build team receiving 100% payment for that item. An NCR log will be kept and reviewed on a weekly basis to ensure items are being addressed. ... Where feasible, status tags will be utilized in the field to identify non-conforming work. Authorization for removal can be approved only by originator of NCR or that person’s supervisor, and only when demonstrated that nonconforming item meets acceptance criteria or has been reviewed and Accepted for use by the Department Project Manager. Unauthorized removal of nonconformance status tags is prohibited.

Thus, under this framework, Level 1 nonconformities required the CDM Smith inspector to inform the foreman and record the exchange in his project diary; Level 2 nonconformities required the CDM Smith inspector to inform the foreman and an RK&K official; and Level 3 nonconformities required a non-conformance report and upper-level input.

In contrast to the Quality Assurance Plan, the Quality Control Plan provided that CDM Smith "will immediately notify the [construction manager] if materials or workmanship do not comply with the specifications" and that "[i]f the issues or deficiencies cannot be resolved, the [CDM Smith] inspector will advise [RK&K] and initiate a Non-conformance report." And elsewhere, the Quality Control Plan stated that CDM Smith was required to "[r]eport any quality deficiencies to the [construction manager], [RK&K], and the [project manager]."

While English’s subcontracts with RK&K and CDM Smith were both based on a form provided by English, RK&K added handwritten amendments to its contract. In particular, as relevant here, it amended Sections 11 and 23 of the contract, which governed RK&K’s potential liability and indemnification obligations, to provide as follows (with RK&K’s amendments that added language noted by italics):

11. Indemnity. To the full extent permitted by law, [RK&K] agrees to indemnify and save harmless [English and VDOT], and their servants and employees, from and against any claim, cost, expense, or liability (including attorney’s fees), attributable to bodily injury, sickness, disease or death, or to damages or destruction of property (including loss of use thereof)

...